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Pharma Stocks: 5 Biggest Companies in 2023

The biggest pharmaceutical companies in the world are responsible for developing and manufacturing the vast majority of prescription drugs, giving them a key role in the life science industry.

The pharma sector is responsible for the discovery, development and manufacturing of drugs and medicine. Companies are developing innovative treatments in areas like immuno-oncology and neurology, as well as novel options for rare diseases. 2023 in particular has seen a lot of buzz around diabetes and weight loss treatments.

With the pharmaceutical sector projected to reach a staggering US$1.6 trillion in total revenue by 2028, the need for the industry is great. Opportunities for investment are also sizeable, but what’s the best place to start? Those who want exposure to the pharma market may want to begin by looking at the major players in the space.

With that in mind, here are the five biggest drug companies by market cap. Data for this article was compiled using’s stock screener on August 16, 2023, and stocks are listed from largest to smallest.

1. Eli Lilly and Company (NYSE:LLY)

Company Profile

Market cap: US$491.22 billion

Founded in 1876, Eli Lilly and Company has R&D facilities and manufacturing plants in eight countries and has done clinical research in over 50 countries. Its pharma products include therapies for diabetes, cancer, immune system diseases and a wide range of mental health conditions. As for its pipeline, Eli Lilly’s clinical trial research areas include cardiovascular health, weight management and neurodegenerative diseases such as Alzheimer’s disease.

The release of Eli Lilly’s Q2 financial results on August 8 sent the company’s share price rocketing upward by nearly US$70. The quarter included breakthroughs for the company’s Alzheimer’s disease treatment donanemab and its obesity treatment tirzepatide, and Eli Lilly submitted applications for both to the US Food and Drug Administration (FDA). The firm’s revenue was up 28 percent year-on-year, partially due to Eli Lilly’s type 2 diabetes injection Mounjaro, which is expected to be a mega-blockbuster drug and could also treat chronic obesity.

Following the release of those results, Eli Lilly closed its acquisitions of Dice Therapeutics, Sigilon Therapeutics and Versanis Bio, adding a wide range of therapies to its portfolio, including Dice’s experimental oral treatment for psoriasis and Versanis’ bimagrumab candidate, which is being assessed for obesity. Sigilon and Eli Lilly have worked together since 2018 on cell therapies for type 1 diabetes that would help remove the need for constant disease management.

2. Johnson & Johnson (NYSE:JNJ)

Company Profile

Market cap: US$448.06 billion

Next on this list of the biggest pharma companies is Johnson & Johnson, a life science holding firm that is massive in scale and covers many areas through its subsidiaries. Its pharmaceutical subsidiary is Janssen Pharmaceuticals, which focuses on six therapeutic areas: cardiovascular disease and metabolism, infectious diseases and vaccines, neuroscience, oncology, immunology and pulmonary hypertension.

Janssen received FDA approval for two of its therapies in August: Talvey for relapsed or refractory heavily pre-treated multiple myeloma, and Akeega for BRCA-positive, metastatic, castration-resistant prostate cancer. The company also submitted a new drug application to the agency — it is looking to expand the indication of its HIV-1 treatment Edurant to include children weighing over 10 kilograms.

3. Novo Nordisk (NYSE:NVO)

Company Profile

Market cap: US$416.81 billion

Novo Nordisk has honed its efforts on both type 1 and type 2 diabetes, obesity, hemophilia and growth disorders. The company markets products in 170 countries. Its diabetes treatment offerings include the app-supported NovoPen 6 and NovoPen Echo Plus, which give diabetes patients a less invasive way to monitor and record dosing information than traditional methods. In 2022, Novo announced a partnership with Microsoft (NYSE:MSFT); Novo will use the tech giant’s artificial intelligence, cloud and computational services for its drug discovery and development.

On August 8, the company shared positive results for its semaglutide therapy, which is geared at achieving weight loss and reducing the risk of cardiovascular events for people who are living with obesity and have no history of diabetes. According to a release, the trial demonstrated a ‘statistically significant and superior reduction’ of major adverse cardiovascular events when people were treated with semaglutide compared to a placebo.

4. Merck & Company (NYSE:MRK)

Company Profile

Market cap: US$275.98 billion

Merck & Company has a massive product line and pipeline, including therapies for diabetes, cancer, vaccines, hospital care and animal health. Currently, the company has over 30 programs in Phase 3 trials and over 10 under review. The company aims to treat conditions such as cancer, HIV, HPV, Ebola, hepatitis C, cardio-metabolic disease and antibiotic-resistant infections.

In June, Merck announced that the FDA had approved a new indication for its drug PREVYMIS to prevent cytomegalovirus disease in adult kidney transplant recipients who are at high risk. August saw another approval from the agency, this time for Merck’s Ervebo Ebola vaccine. Previously approved for adults over 18, Ervebo can now be administered starting at age one.

5. AbbVie (NYSE:ABBV)

Company Profile

Market cap: US$267.4 billion

AbbVie’s areas of focus, according to the company, are places where it has proven its expertise and has the potential to improve treatments. Those include immunology, oncology, neuroscience, eye care and aesthetics. The company’s portfolio includes Humira, which is a therapy for autoimmune conditions such as rheumatoid arthritis and Crohn’s disease. It is one of the top-selling drugs of all time, but its patent expired in 2018 and the first biosimilar hit the market in early 2023.

The company’s revenue was expected to take a large hit due to Humira’s new competition, but AbbVie’s Q2 financial results, which were released at the end of July, came in above expectations, primarily driven by the company’s non-Humira products, according to AbbVie’s CEO and chairman. As for upcoming treatments, the European Commission approved AbbVie’s Aquipta preventative migraine treatment in August.

FAQs for pharmaceutical stocks

What does the pharmaceutical industry do?

The pharmaceutical industry encompasses a variety of companies that have different — although sometimes overlapping — roles to play. The most famous players are the big pharma companies. These giants often have a variety of subsidiaries, large pipelines and many products in their portfolios. There are also smaller pharma R&D companies, which sometimes get acquired by larger firms if their work seems promising. Companies in these categories research, develop and sometimes bring to market drugs aimed at filling unmet needs, such as products to treat conditions that are currently untreatable or to help people who are resistant to pre-existing treatment options.

Once patents run out on prescription drugs, generic drug manufacturers create much cheaper generic versions. Wholesale companies also play a large role in the pharma sector. According to Common Wealth Fund, wholesalers have four areas through which they affect the buying and distribution of drugs: ‘setting generic drug prices, leveraging list price increases, competing in specialty drug distribution, and mitigating or exacerbating drug shortages.’

What is the big pharma business model?

Big pharma companies have a fairly consistent business model. Often, the company’s R&D team will slowly develop a new drug through many stages of testing to prove the drug’s efficacy, safety and necessity.

If all trials are completed successfully, the company will apply to government organizations such as the FDA, which must approve the drug before it can be mass produced, marketed and sold. Companies can skip a number of these steps by acquiring smaller companies, or through in-licensing, which results in two companies sharing the burden of a drug’s development through to commercialization. However, it’s worth noting that large pharma companies have many drugs in their pipelines at any given time, and many don’t make it to approval.

Once a drug is approved by the relevant health organization, it can then be marketed and prescribed. Because patents expire after 20 years, companies lobby and advertise to try to get as many sales as possible during that window.

Who are the ‘Big 3’ in pharma?

The ‘Big 3’ in pharma refers to the three largest wholesalers: AmerisourceBergen (NYSE:ABC), Cardinal Health (NYSE:CAH) and McKesson (NYSE:MCK). Collectively, those three companies account for over 90 percent of wholesale prescription drug distribution in the US.

Which country is number one in the pharma industry?

The US is the top pharmaceutical country, with five of the top 10 pharma companies by revenue headquartered in the nation, including the top three of Pfizer (NYSE:PFE), AbbVie and Johnson & Johnson. The country is also in the lead when it comes to consumer spending on pharmaceuticals due to the high cost of brand-name drugs.

The US is also the top country globally for R&D spending — companies that are part of PhRMA, a trade group that represents US biopharmaceutical companies, spent US$102 billion on R&D in 2021 out of a total of US$238 billion spent by pharmaceutical companies globally that year.

What are the problems in the pharmaceutical industry?

One of the largest problems with the pharmaceutical industry, particularly in the US, is the high cost of treatments. According to a study looking at American prescription drug spending between 2016 and 2021, prescription drug prices were 2.5 times the cost on average of prices in similar high-income nations.

An example that has been at the center of discourse in recent years is insulin, which can cost Americans with type 1 diabetes over US$1,000 per month. In early 2023, US President Joe Biden signed the Inflation Reduction Act into law, and it includes a cap of US$35 per month on insulin for seniors on Medicare, although it does not help people who are uninsured or have private health insurance. Eli Lilly has now instituted that same price cap for all users of their insulin, and there is push for further legislation.

However, while progress in insulin pricing is happening, it’s far from the only medication with high costs. According to the aforementioned study, the top 10 percent most expensive drugs account for less than 1 percent of all prescriptions, but make up 15 percent of all retail prescription spending.

While generic versions of medications are relatively cheap, they can’t be created until patent protection for the brand name version expires, which is usually 20 years after filing for the patent.

What is the future of pharmaceuticals?

Pharmaceutical companies will have to adapt to changing times moving forward. The world is shifting, with economic woes, geopolitical disruptions and supply chain concerns affecting nearly every sector. Innovation continues to accelerate as well, and the medical landscape has changed in the wake of COVID-19. Additionally, the US government is making moves to address the astronomical prices of prescription medicine as the industry comes under increasing scrutiny.

For a look at what is else is effecting the market in 2023, read our 2023 Pharma Market Forecast.

Are pharmaceutical stocks risky?

While established players like the big pharma and wholesale companies discussed above should be relatively consistent, small companies are make-or-break depending on whether their drugs are successful. This means that investors could see much higher returns compared to large companies, but run the risk of taking massive losses in the case of failure.

Securities Disclosure: I, Lauren Kelly, hold no direct investment interest in any company mentioned in this article.

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